But first: a quick announcement!
Due to my increasing workload (and as part of the many exciting changes that will be coming to PMN in the coming months), I'll be scaling back my posting schedule to Mondays, Wednesdays, and Fridays instead of the five days a week I've been rocking thus far. A couple of notes:
• Fridays will still feature round-ups from Laura!
• Tuesdays and Thursdays will usually be post-less, but! And here's the exciting part:
• PMN is now open to guest post submissions on a rolling basis! You heard right, cats & kittens. Whenever you happen to have a guest post that you think might be a good fit for the blog, just e-mail it along. Alas, due to predicted volume, I'll only be able to respond if I'm interested, but I should be able to get back to you within a week. And your post could go up on PMN on any given Tuesday or Thursday! Mull that over. Go ahead, mull to your hearts' content.
Okay, good. And now... the post!
If you haven't read today's Publisher's Lunch, here's the deal: in addition to (continuing) delays of payment to vendors, Borders is now delaying payments to landlords as well. That's right: they can't afford to pay rent. This is bad news bears, cats & kittens.
Borders is basically buying time with this maneuver, hoping to convince enough vendors to convert late payements to interest-bearing debt to satisfy GE Capital's new requirements and earn themselves a new line of credit.
Failing this, however, Borders will run out of money, and with landlords, publishers, and other creditors clamoring for money owed, BGP will likely have to seek refuge in the courts—that is, file for bankruptcy.
Borders' stock is now trading below $0.75/share. Financiers and publishers alike haven't been persuaded by Borders' plans to revive their business, and with the amount of exposure publishers are already facing, it's unlikely they'll convert back payments to debt while continuing to ship Borders books. In short—and based entirely on the publicly available data—I think you should think about using up those Borders gift cards. Sooner might be better than later.
Wednesday: brand management! Marketing! Other buzz words!
I let the friends and family know a long time ago this cat only accepts Amazon gift cards or cold hard cash. Great post. Have you heard the same thing is happening in the UK with one of it's major media outlets?
ReplyDeleteIn my country, we don't have a Borders. But I remember the first time I stepped into one. The store was located in Malaysia. I thought to myself, Makkah! I wanted to spend the rest of my trip within its walls and between its shelves. It's a shame that this is happening. Borders needs a big hug, or a big Band-Aid to stop the bleeding.
ReplyDeleteWell, I'm all set with the gift card spending. The one small order I put in during the first week of January came in a couple of weeks ago, so if they want to fold up and go bye-bye, that's okay by me.
ReplyDeleteIf anything, it will stop the insanity of coupons that enters my mail on an hourly basis.
You say they're buying time right now. How much time exactly? They're still offering year-long Rewards Plus memberships to customers at my Borders, which is something you have to PAY for.
ReplyDeleteThis doesn't surprise me. My husband and I went in the other day and their prices were higher than anything we'd found online. The prices were even higher than their own website. Either they're doing a poor job of communicating sale prices for books, or they really are selling Earth for $28 when everyone else has it for $14 (plus free shipping - why go to the store at all?) I like going to book stores, so I hope it doesn't happen, but it seems like this one may have been a long time coming.
ReplyDeleteJoshua Blimes blogged about this yesterday as well. He pointed out one important thing. Landlords are the only part of the equation that can really screw you. They have the power to change your locks and keep you from your merchandise. Once you stop paying your landlord, your business is jumping up and down on thin ice.
ReplyDelete@Jayme: The first thing liquidators do when they come in to liquidate a company is increase prices. People presume that when a company is going under everything will be selling for a fraction, and eventually it will be. But step one is jacking up prices to generate as much cash flow as possible to pay off debtors. Borders stores are not necessarily expensive, they're just not discounting like they were because they need to raise as much cash as they can.
I love my Borders and received my money's worth of Rewards Membership for the year. (For $20 they give you a $10 right away and an additional 10% off, and I've earned $10 in rewards I just redeemed). I wouldn't suggest getting one unless you plan on using it heavily in the near future.
ReplyDeleteHopefully someone will step up and buy Borders for pennies on the dollar. (B&N?)
I love saving $$$ at Amazon, but it's killing the local stores. I rarely go to Best Buy anymore.
MUST SPEND MY LAST $0.28 IN GIFT CARDS BEFORE BORDERS LEAVES US!
ReplyDelete@Joseph L. Selby: I noticed that phenomenon (the jacked-up prices) when Circuit City was going under as well. It helps them out later, too, when they're offering everything for 70% off or higher. 30% of $28 is still twice as much cash as 30% of the original $14.
ReplyDelete@Jayme: I suspect, to a certain extent, that Borders has always done this because they encourage use of their coupons so much. You feel like you're saving 40%, so it should be a great deal, but really you end up paying about the same amount you would elsewhere.